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Laurel Enterprises expects earnings next year of $4.45 per share and has a 40% retention rate, which it plans to keep constant. Its equity cost of capital is 11% , which is also its expected return on new investment. Its earnings are expected to grow forever at a rate of 4.4% per year. If its next dividend is due in one year, what do you estimate the firm's current stock price to be?
A company is considering the acquisition of production equipment which will reduce both labor and materials costs. The cost is $100,000 and it will be depreciated on a straight-line basis down to $0. The firm’s tax rate is 35 percent and the required..
Your company has two divisions: One division sells software and the other division sells computers through a direct sales channel, primarily taking orders over the internet. What is an estimate of the WACC fir your computer sales division? If your ov..
Consider a publicly traded company whose stock price is currently equal to $100 and whose volatility is 30% per year. Calculate the value of your portfolio. Assume that one day has passed and the stock price declined to $99. What is your hedged portf..
Peng Plasma Pricing. Peng Plasma is a privately held Chinese business. It specializes in th manuifacture of plasma cutting torches. Over the past eight years it has held the Chinese renminbi price of the PT350 cutting torch fixed at Rmb 17.300 per un..
LuLU Co. paid a dividend of 2 last year. They are expected to pay 2.2 this year. The rate of growth is expected to continue forever. Shareholders need to earn 15%. Find the fair price. Jeffersonco stock is currently valued at 8 per share. Find the pr..
ABC Company has the following projected sales: Month Sales $ Jan 31,680 Feb 26,920 Mar 23,444 Apr 49,771 22% of the sales are on cash and the remainder are on credit. Out of the credit sales, 53% are collected in the first month after sale, 24% are c..
Road Corporation acquired all of Conger Corporation's voting shares on January 1, 20X2, for $471,000. At that time Conger reported common stock outstanding of $85,000 and retained earnings of $134,000. what accounts and amounts would be debited or cr..
Tim Smith is shopping for a used car. He has found one priced at $4,000. The salesman has told Tim that if he can come up with a down payment of $700, the dealer will finance the balance of the price at an annual rate of 15% over 4 years (48 months)...
First Simple Bank pays 9 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match First Simple Bank over an investment horizon of 1..
what incremental free cash flows should be included to account for the need to accelerate the purchase of the tank? cars?
(Leverage and EPS) You have developed the following proforma income statement for your corporation: Sales $45832000 Variable costs (22756000) Revenue before fixed costs $23076000 Fixed costs (9105000) EBIT $13971000 Interest expense (1317000) Earning..
Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the bond-yield-plus-risk-premium approach, and the DCF model.
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